8-K
Bridgewater Bancshares Inc (BWB)
8-K
2022-11-01
For: 2022-11-01
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
November 1, 2022
Date of Report
(Date of earliest event reported)
BRIDGEWATER BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
| <br><br><br><br> | <br><br> | <br><br><br><br> |
|---|---|---|
| Minnesota<br><br>(State or other jurisdiction of<br><br>incorporation) | 001-38412<br><br>(Commission File Number) | 26-0113412<br><br>(I.R.S. Employer<br><br>Identification No.) |
| | 4450 Excelsior Boulevard, Suite 100<br><br>St. Louis Park , Minnesota<br><br>(Address of principal executive offices) | 55416<br><br>(Zip Code) |
Registrant’s telephone number, including area code: (952) 893-6868
Not Applicable (Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class: | Trading Symbol | Name of each exchange on which registered: |
|---|---|---|
| Common Stock, $0.01 Par Value<br><br>Depositary Shares, each representing a 1/100th interest in a share of 5.875% Non-Cumulative Perpetual Preferred Stock, Series A, $0.01 par value per share | BWB<br><br>BWBBP | The NASDAQ Stock Market LLC<br><br>The NASDAQ Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 7.01 Regulation FD Disclosure.
Bridgewater Bancshares, Inc. (the “Company”) is furnishing an Investor Presentation, which will be used, in whole or in part, from time to time by executives of the Company in meetings with investors and analysts. A copy of the Investor Presentation is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The information furnished in this item of this Form 8-K, and the related exhibits, shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as may be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d)****Exhibits
| Exhibit 99.1 | Investor Presentation dated November 1, 2022 |
|---|---|
| Exhibit 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
| --- | --- |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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|---|---|
| | Bridgewater Bancshares, Inc. |
| | |
| | |
| Date: November 1, 2022 | |
| | By: /s/ Jerry Baack |
| | Name: Jerry Baack |
| | Title: Chairman, Chief Executive Officer and President |
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Exhibit 99
| Disclaimer<br>Forward<br>-<br>Looking Statements<br>This presentation contains “forward<br>-<br>looking statements” within the meaning of the safe harbor provisions of the U.S. Private Sec<br>urities Litigation Reform Act of 1995. Forward<br>-<br>looking statements include, without limitation, statements<br>concerning plans, estimates, calculations, forecasts and projections with respect to the anticipated future performance of th<br>e C<br>ompany. These statements are often, but not always, identified by words such as “may”, “might”, “should”,<br>“could”, “predict”, “potential”, “believe”, “expect”, “continue”, “will”, “anticipate”, “seek”, “estimate”, “intend”, “plan”,<br>“p<br>rojection”, “would”, “annualized”, “target” and “outlook”, or the negative version of those words or other comparable<br>words of a future or forward<br>-<br>looking nature.<br>Forward<br>-<br>looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on ou<br>r current beliefs, expectations and assumptions regarding our business, future plans and strategies,<br>projections, anticipated events and trends, the economy and other future conditions. Because forward<br>-<br>looking statements relate t<br>o the future, they are subject to inherent uncertainties, risks and changes in circumstances that are<br>difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ mate<br>ria<br>lly from those indicated in the forward<br>-<br>looking statements. Therefore, you should not rely on any of these<br>forward<br>-<br>looking statements. Important factors that could cause our actual results and financial condition to differ materially f<br>rom those indicated in the forward<br>-<br>looking statements include, among others, the following: interest rate<br>risk, including the effects of recent and anticipated rate increases by the Federal Reserve; fluctuations in the values of th<br>e s<br>ecurities held in our securities portfolio, including as a result of rising interest rates; business and economic<br>conditions generally and in the financial services industry, nationally and within our market area, including rising rates of<br>in<br>flation; the negative effects of the ongoing COVID<br>-<br>19 pandemic, including its effects on the economic<br>environment, our clients and our operations, including due to supply chain disruptions, as well as any changes to federal, st<br>ate<br>or local government laws, regulations or orders in connection with the pandemic; loan concentrations in our<br>portfolio; the overall health of the local and national real estate market; our ability to successfully manage credit risk; o<br>ur<br>ability to maintain an adequate level of allowance for loan losses; new or revised accounting standards, including<br>as a result of the future implementation of the Current Expected Credit Loss standard; the concentration of large loans to ce<br>rta<br>in borrowers; the concentration of large deposits from certain clients; our ability to successfully manage<br>liquidity risk, especially in light of recent excess liquidity at the Bank; our dependence on non<br>-<br>core funding sources and our c<br>ost of funds; our ability to raise additional capital to implement our business plan; our ability to implement our<br>growth strategy and manage costs effectively; developments and uncertainty related to the future use and availability of some<br>re<br>ference rates, such as the London Interbank Offered Rate, as well as other alternative reference rates; the<br>composition of our senior leadership team and our ability to attract and retain key personnel; talent and labor shortages an<br>hig<br>h rates of employment turnover; the occurrence of fraudulent activity, breaches or failures of our<br>information security controls or cybersecurity<br>-<br>related incidents; interruptions involving our information technology and telecom<br>munications systems or third<br>-<br>party servicers; competition in the financial services industry, including from<br>nonbank competitors such as credit unions and “fintech” companies; the effectiveness of our risk management framework; the co<br>mme<br>ncement and outcome of litigation and other legal proceedings and regulatory actions against us; the<br>impact of recent and future legislative and regulatory changes, including changes to federal and state corporate tax rates; t<br>he<br>imposition of tariffs or other governmental policies impacting the value of products produced by our<br>commercial borrowers; severe weather, natural disasters, wide spread disease or pandemics (including the COVID<br>-<br>19 pandemic), act<br>s of war or terrorism or other adverse external events, including the Russian invasion of Ukraine;<br>potential impairment to the goodwill we recorded in connection with our past acquisition; changes to U.S. or state tax laws,<br>reg<br>ulations and guidance, including the new 1% excise tax on stock buybacks by publicly traded companies; and<br>any other risks described in the “Risk Factors” sections of reports filed by the Company with the Securities and Exchange Com<br>mis<br>sion.<br>Any forward<br>-<br>looking statement made by us in this press release is based only on information currently available to us and speaks<br>only as of the date on which it is made. We undertake no obligation to publicly update any forward<br>-<br>looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, futur<br>e d<br>evelopments or otherwise. Certain of the information contained in this presentation is derived from<br>information provided by industry sources. Although we believe that such information is accurate and that the sources from whi<br>ch<br>it has been obtained are reliable, we cannot guarantee the accuracy of, and have not independently<br>verified, such information.<br>Use of Non<br>-<br>GAAP financial measures<br>In addition to the results presented in accordance with U.S. General Accepted Accounting Principles (“GAAP”), the Company rou<br>tin<br>ely supplements its evaluation with an analysis of certain non<br>-<br>GAAP financial measures. The Company<br>believes these non<br>-<br>GAAP financial measures, in addition to the related GAAP measures, provide meaningful information to investor<br>s to help them understand the Company’s operating performance and trends, and to facilitate<br>comparisons with the performance of peers. These disclosures should not be viewed as a substitute for operating results dete<br>rmi<br>ned in accordance with GAAP, nor are they necessarily comparable to non<br>-<br>GAAP performance measures<br>that may be presented by other companies. Reconciliations of non<br>-<br>GAAP disclosures to the comparable GAAP measures are provided i<br>n this presentation.<br>2 |
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| The Finest Entrepreneurial Bank<br>in the Twin Cities<br>Company Overview<br>Branch<br>-<br>Light Model in Attractive Twin Cities Market<br>Twin Cities MSA<br>Name:<br>Bridgewater Bancshares, Inc.<br>Headquarters:<br>St. Louis Park, MN<br>Ticker:<br>NASDAQ: BWB; BWBBP<br>Assets:<br>$4.1 Billion<br>Loans:<br>$3.4 Billion<br>Deposits:<br>$3.3 Billion<br>Shareholders’ Equity:<br>$382.0 Million<br>Serving a Commercial<br>-<br>Focused Client Base<br>Track Record of Profitability, Growth and Efficiency<br>•<br>CRE lending<br>•<br>Acquisition financing<br>•<br>Construction lending<br>•<br>Affordable housing<br>financing<br>•<br>Long<br>-<br>term multifamily<br>financing<br>•<br>Commercial & business<br>lending<br>•<br>Business / treasury<br>management<br>•<br>SBA lending<br>•<br>1<br>-<br>4 family rentals<br>•<br>Personal banking<br>CRE<br>,<br>31%<br>Multifamily<br>,<br>36%<br>C&D<br>,<br>10%<br>PPP<br>,<br>0%<br>C&I<br>,<br>12%<br>1<br>-<br>4 Family<br>,<br>10%<br>Consumer<br>,<br>0%<br>$3.4B<br>Business and<br>Personal Banking<br>Commercial<br>Banking<br>Loan Balances<br>•<br>Founded in 2005 by a group of banking industry veterans and local<br>business leaders<br>•<br>Continuous profitability since the third month of operations<br>•<br>Proven stability, growth and profitability through both the Great<br>Recession and the COVID<br>-<br>19 pandemic<br>•<br>Expertise in commercial real estate with a focus in multifamily lending<br>•<br>Organizational focus on risk management<br>•<br>Effective operating model, with one of the lowest efficiency ratios in<br>the industry<br>Data as of September 30, 2022<br>3 |
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| Strategic Leadership Team with<br>Broad Skill Sets and Industry Expertise<br>4<br>Jerry Baack<br>Chairman, CEO and President<br>•<br>Past regulator and responsible for all aspects of BWB formation<br>•<br>Lead founder of BWB in 2005<br>•<br>30+ years of banking experience<br>Jeff<br>Shellberg<br>EVP and Chief Credit Officer<br>•<br>Holding company board member and oversees strong credit and<br>underwriting culture<br>•<br>BWB founding member in 2005<br>•<br>35+ years of regulatory and banking experience<br>Nick Place<br>Chief Lending Officer<br>•<br>Client<br>-<br>focused while meeting and responding to market<br>demands<br>•<br>Joined BWB in 2007<br>•<br>15 years of banking experience<br>Mark<br>Hokanson<br>Chief Technology Officer<br>•<br>Proactively drives technology and innovative solutions to support<br>future growth<br>•<br>Joined BWB in 2019<br>•<br>14 years of financial services technology experience<br>Mary Jayne Crocker<br>EVP and Chief Operating Officer<br>•<br>Implementation of unique corporate culture and strategic execution<br>•<br>Joined BWB in 2005<br>•<br>20+ years of financial services experience<br>Joe<br>Chybowski<br>Chief Financial Officer<br>•<br>Strategic insights across the organization including capital and<br>liquidity management<br>•<br>Joined BWB in 2013<br>•<br>12 years of banking and capital markets experience<br>Lisa Salazar<br>Chief Deposit Officer<br>•<br>Drives accountability and results through initiatives that deliver revenue<br>growth, market share, new business opportunities and market penetration<br>•<br>Joined BWB in 2018<br>•<br>Nearly 30 years of banking experience |
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| A Culture<br>-<br>Driven Organic Growth Story<br>5<br>Consistent Profitability and<br>Shareholder Return<br>Truly Unconventional Culture<br>Highly Efficient Business Model<br>Robust Balance Sheet Growth<br>Proactive Risk Management<br>•<br>Entrepreneurial spirit unlike the culture at a typical<br>bank<br>•<br>New HQ with modern, open layout promoting<br>team member and client collaboration<br>•<br>Commitment to provide clients with quick<br>answers, responsive support and simple solutions<br>•<br>Commitment to positively impact the communities<br>we serve<br>•<br>Generating robust organic loan growth is simply<br>who we are (25% CAGR<br>1<br>since 2015)<br>•<br>Commercial business expertise with a multifamily<br>focus<br>•<br>Deposit growth supporting loan growth<br>•<br>M&A<br>-<br>related market disruption resulting in client<br>and banker acquisition opportunities to support<br>loan and deposit growth<br>•<br>Branch<br>-<br>light model and commercial real estate<br>focus<br>•<br>Efficient operating philosophy, including<br>networking, banking tools and in<br>-<br>house expertise<br>•<br>Relatively low levels of expenses as a percent of<br>total assets<br>•<br>Efficiency ratio consistently in the low 40% range,<br>among the lowest in the industry<br>•<br>Scaling of risk management function to address<br>emerging risks and support growth plans<br>•<br>Decisive credit culture including consistent<br>underwriting, active loan monitoring and deep<br>industry experience<br>•<br>Well diversified loan portfolio across asset classes<br>•<br>Superb asset quality track record<br>>2%<br>Consistent<br>Pre<br>-<br>Provision Net Revenue<br>(PPNR) ROA<br>2<br>21%<br>Diluted EPS CAGR<br>since 2018<br>17%<br>Tangible book value<br>per share<br>2<br>CAGR<br>since 2018<br>1<br>Excludes PPP loans<br>2<br>Represents a Non<br>-<br>GAAP financial measure. See Appendix for Non<br>-<br>GAAP reconciliation. |
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| Our Core Values<br>Unconventional<br>..<br>Our clients notice a difference.<br>Responsive.<br>Under promise, over deliver.<br>Dedicated.<br>Don’t stop until you get it done.<br>Growth.<br>If you aren’t moving forward, where are you going?<br>Accurate.<br>It’s more than just an expectation.<br>6 |
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| An Award<br>-<br>Winning Workplace Culture<br>“In today’s environment, it is more important than<br>ever to be able to recruit, retain and develop top<br>talent. At Bridgewater, we have demonstrated an<br>ability to do this through our unconventional culture<br>and employee experience, extensive team member<br>referral network, and even the launch of a new<br>internship program to further enhance our talent<br>pipelines.”<br>Jerry Baack<br>Chairman, CEO and President<br>Top Workplaces<br>Star Tribune<br>2016. 2017. 2018. 2020. 2021. 2022.<br>Best Banks to Work For<br>American Banker<br>2017. 2018. 2020.<br>7<br>New Corporate Headquarters<br>Progressive Pay and Benefits<br>Health and Wellness<br>Committee<br>Diversity, Equity and<br>Inclusion Committee<br>Volunteer Paid Time Off<br>Modern, open design with an entrepreneurial spirit tailor<br>-<br>made for<br>team building and collaboration<br>Increased<br>minimum wage to $20 per hour<br>in August 2021, as well<br>as discretionary bonuses for all team members regardless of level<br>Providing team member<br>o<br>pportunities to support physical and<br>mental health<br>,<br>including fitness events and free access to a<br>mindfulness app<br>Inclusive culture that<br>encourages, supports and celebrates<br>diversity<br>of team members and communities in which we serve<br>Team members receive up to<br>16 hours of PTO per year for<br>volunteer activities<br>supporting the Community Reinvestment Act<br>(CRA) |
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| A Responsive Service Model<br>Our clients can expect…<br>•<br>Responsive support and<br>simple solutions<br>•<br>A local bank of choice in a<br>market where many local<br>banks have left<br>•<br>Flexibility, market<br>expertise and strong<br>network connections<br>8<br>The “Proven Process” for Our Clients<br>•<br>#1 BEST<br>Business Bank<br>•<br>#1 BEST<br>Small Business<br>Banking<br>•<br>#1 BEST<br>Commercial<br>Mortgage Lender<br>An Award<br>-<br>Winning Client Experience<br>•<br>#1 BEST<br>Business Bank<br>•<br>#2 BEST<br>Community Bank |
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| A Commitment to Our Communities<br>Our communities can expect…<br>Bridgewater’s commitment to<br>investing, lending and volunteering<br>in ways that serve low<br>-<br>to<br>-<br>moderate<br>income segments in the Twin Cities<br>‘Outstanding’ Rating for Community<br>Reinvestment Act Performance<br>FDIC, 2020<br>9<br>$219M<br>Community<br>Development Loan<br>Originations<br>in 2021<br>$310K<br>Total<br>Contributions<br>in 2021<br>1,394<br>Volunteer Hours<br>in 2021<br>Empowering Women in Entrepreneurship<br>In 2021, BWB established the<br>PowHER<br>Network<br>,<br>a women’s networking cohort which brings<br>together successful women in business and<br>female entrepreneurs throughout the Twin<br>Cities to network and share insights<br>•<br>~175 female<br>entrepreneurs and<br>business leaders<br>•<br>Several events hosted<br>at the BWB Corporate<br>Center throughout the<br>year<br>•<br>Led by BWB’s Chief<br>Operating Officer,<br>Mary Jayne Crocker<br>Mary Jayne Crocker<br>EVP and Chief<br>Operating Officer |
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| Environmental, Social and Governance (ESG)<br>10<br>We are committed to establishing and advancing impactful initiatives that support our<br>corporate responsibility as a growing local bank in the Twin Cities, while regularly sharing our<br>progress with our stakeholders<br>Our ESG<br>Commitment<br>Our ESG Priorities<br>Team Members, Clients<br>and Communities<br>Diversity, Equity<br>and Inclusion<br>Leverage our unconventional corporate culture<br>to leave a positive lasting impact on our team<br>members, clients and communities<br>Ensure strong corporate governance oversight<br>including an effective risk management<br>framework to support a growing organization<br>Create a diverse, equitable and inclusive work<br>environment and community<br>Contribute to a healthier natural environment in<br>the communities in which we live and work<br>Corporate<br>Governance<br>Environmental<br>ESG Oversight<br>•<br>Board<br>-<br>level<br>Nominating and ESG Committee<br>oversees Bridgewater's strategy and practices<br>related to ESG<br>•<br>Management<br>-<br>level<br>ESG Committee<br>focused on<br>developing, implementing and growing a formal<br>ESG program<br>For more about Bridgewater’s commitment, priorities and initiatives related to ESG,<br>please visit our newly launched ESG webpage at<br>www.BWBMN.com/about<br>-<br>Bridgewater/esg |
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| Attractive Twin Cities Market<br>Built for Business<br>11<br>#1<br>Fortune 500 companies<br>per capita (16)<br>1<br>Large Corporate Presence<br>#1<br>State with highest<br>average credit score (726)<br>2<br>Credit Worthy Population<br>#1<br>Best place for<br>women entrepreneurs<br>3<br>Women Entrepreneurs<br>#5<br>State with educational achievement<br>beyond high school<br>(59% of age 25<br>-<br>64 population)<br>4<br>Educated Workforce<br>#7<br>Small<br>-<br>business job growth<br>(Minneapolis market)<br>5<br>Business Focus<br>Top 20<br>Most populated area in the U.S.<br>with 4.5% projected<br>population growth by 2027<br>6<br>High Growth MSA<br>4.53%<br>1.97%<br>3.21%<br>Twin Cities<br>Midwest<br>US<br>$92,084<br>$68,394<br>$72,465<br>Twin Cities<br>Midwest<br>US<br>Banking industry disruption caused by M&A activity leading to<br>opportunities for client and talent acquisition in the Twin Cities<br>Banking Industry Disruption<br>2022 Median Household Income ($)<br>7<br>2022<br>–<br>2027 Proj. Population Growth (%)<br>⁶<br>1<br>Source: Minnesota Department of Employment and Economic Development<br>2<br>Source: Experian<br>–<br>State of Credit, 2021<br>3<br>Source: Minneapolis<br>-<br>St. Paul Smart<br>Asset<br>TM<br>, 2020<br>4<br>Source: Lumina Foundation, A Stronger Nation<br>–<br>National Report, 2021<br>5<br>Source: Minnesota Department of Employment and Economic Development<br>6<br>Source: S&P Capital IQ<br>7<br>Source: S&P Capital IQ, Midwest includes ND, SD, NE, KS, MN, IA, MO, WI, IL, IN and OH |
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| History of Organic Asset Growth Generation<br>12<br>$1,184<br>$76<br>$929<br>$1,260<br>$1,617<br>$1,974<br>$2,269<br>$2,927<br>$3,478<br>$4,129<br>2015<br>2016<br>2017<br>2018<br>2019<br>2020<br>2021<br>3Q22<br>Acquired Assets<br>Organic<br>Proven ability to consistently generate<br>20%+ annual asset growth<br>primarily in the Twin Cities market<br>Asset growth has almost exclusively<br>been organic, with the exception of a<br>small bank acquisition in 2016<br>Dollars in millions<br>Anticipate the Twin Cities market can<br>support BWB growth to at least<br>$5B in assets over the next few years |
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| Robust Loan Growth Isn’t Unusual at BWB,<br>It’s Who We Are<br>13<br>$2,188<br>$2,793<br>$3,379<br>$138<br>$26<br>$1<br>$799<br>$1,001<br>$1,347<br>$1,665<br>$1,912<br>$2,326<br>$2,819<br>$3,380<br>2015<br>2016<br>2017<br>2018<br>2019<br>2020<br>2021<br>3Q22<br>PPP<br>Loans (ex. PPP)<br>Dollars in millions<br>Current BWB Loan Growth Catalysts<br>Strong brand and service model<br>in the Twin Cities market<br>Expanding referral base means getting a<br>look at the CRE deals we want<br>M&A<br>-<br>related market disruption<br>resulting in client and banker<br>acquisition opportunities<br>PPP<br>-<br>related client acquisition<br>opportunities<br>Over 40% of PPP loan originations were to<br>new clients<br>Expansion of talented lending<br>and business services teams<br>Supporting loan and deposit growth and<br>enhancing client experience<br>Operating in a competitive<br>“sweet spot” in the Twin Cities<br>Financing larger deals than community banks but<br>under the radar of the larger banks<br>Loan Growth Outlook<br>•<br>Expect continued loan growth moderation in the mid<br>-<br>teens range<br>•<br>Loan pipelines and overall demand remain strong<br>•<br>Fewer deals making financial sense due to the higher interest rate environment<br>•<br>Actively managing the balance sheet to align with funding outlook<br>•<br>Leveraging sales of participations on larger originations to manage growth<br>•<br>More selective on loan pricing to support the net interest margin<br>•<br>More selective on credit by focusing on high quality transactions with seasoned clients |
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| 354%<br>333%<br>318%<br>304%<br>313%<br>266%<br>264%<br>250%<br>180%<br>164%<br>185%<br>177%<br>204%<br>190%<br>219%<br>252%<br>534%<br>497%<br>503%<br>480%<br>517%<br>456%<br>483%<br>502%<br>2015<br>2016<br>2017<br>2018<br>2019<br>2020<br>2021<br>3Q22<br>Well<br>-<br>Diversified Loan Portfolio<br>With a Commercial Focus<br>14<br>CRE NOO<br>27%<br>Multifamily<br>21%<br>C&D<br>15%<br>1<br>-<br>4 Family<br>18%<br>CRE OO<br>6%<br>C&I<br>13%<br>Consumer &<br>Other<br>0%<br>$0.8B<br>Evolution of Loan Mix by Type<br>2015<br>3Q22<br>Intentional mix shift toward Multifamily has aligned with the<br>build<br>-<br>out of talent and expertise in the segment,<br>and continued strong performance<br>Track Record of Successfully Managing Concentrations<br>of CRE and Multifamily Loans<br>Multifamily / Bank Risk<br>-<br>Based Capital<br>CRE (ex. Multifamily) / Bank Risk<br>-<br>Based Capital<br>•<br>Remain comfortable with current CRE concentration levels<br>•<br>CRE concentration (ex. Multifamily) below 300% of bank capital<br>•<br>View Multifamily separate from traditional CRE given its lower risk<br>profile<br>•<br>No net charge<br>-<br>offs over the past five years<br>•<br>Only $62K of net charge<br>-<br>offs since inception<br>CRE NOO<br>27%<br>Multifamily<br>36%<br>C&D<br>10%<br>1<br>-<br>4 Family<br>10%<br>CRE OO<br>4%<br>C&I<br>12%<br>Consumer<br>& Other<br>0%<br>PPP<br>0%<br>$3.4B |
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| Well<br>-<br>Positioned for Continued Growth<br>Opportunities Across Key Portfolios<br>15<br>5<br>-<br>19<br>Units<br>14%<br>20<br>-<br>49<br>Units<br>27%<br>50<br>-<br>99<br>Units<br>28%<br>100+<br>Units<br>31%<br>Size<br>YoY Growth<br>Go<br>-<br>to<br>-<br>Market<br>Strategy<br>Competitors<br>Growth Outlook<br>Key Stats<br>Portfolio<br>Diversification<br>Multifamily<br>CRE Nonowner Occupied<br>C&I<br>Construction & Development<br>Bank of choice in the Twin Cities<br>market due to proven expertise and<br>service model<br>Knowledgeable lenders with<br>efficient closing processes and<br>ample capacity<br>Responsive support, simple<br>solutions and the local touch<br>entrepreneurs are looking for<br>Continued build<br>-<br>out of team<br>creating additional client<br>opportunities<br>JPMorgan Chase, agency lenders,<br>local banks and credit unions<br>Local banks, life insurance<br>companies<br>Local banks, regional banks<br>Local banks<br>Continued appetite given expertise<br>and market opportunities<br>Strong market fundamentals and<br>recent hires drive market share gains<br>Growth due to recent hires with<br>goal to add loan diversification<br>over time<br>Growth to continue as recent<br>projects fund over 12<br>-<br>24 months<br>$2.9M<br>Avg. Loan<br>Size<br>63%<br>Weighted<br>Avg. LTV<br>100%<br>Loans with<br>Pass Rating<br>$2.2M<br>Avg. Loan<br>Size<br>61%<br>Weighted<br>Avg. LTV<br>98%<br>Loans with<br>Pass Rating<br>$497K<br>Avg. Loan<br>Size<br>0.03<br>%<br>5<br>-<br>Year<br>NCOs<br>98%<br>Loans with<br>Pass Rating<br>$945K<br>Avg. Loan<br>Size<br>64%<br>Weighted<br>Avg. LTV<br>0.01<br>%<br>5<br>-<br>Year<br>NCOs<br>Unit<br>Type<br>Office<br>20%<br>Retail<br>17%<br>Industrial<br>26%<br>Senior<br>Housing<br>15%<br>Hotel<br>2%<br>Restaurant<br>2%<br>Other<br>18%<br>Property<br>Type<br>RE, Rental<br>and<br>Leasing<br>40%<br>Constr.<br>12%<br>Manufact.<br>15%<br>Finance &<br>Ins.<br>8%<br>Prof.<br>Services<br>6%<br>Accom. & Food<br>Service<br>3%<br>Trade<br>7%<br>Other<br>9%<br>Industry<br>Residential<br>19%<br>Multifamily<br>40%<br>CRE Other<br>11%<br>Land<br>30%<br>Property<br>Type<br>Data as of September 30, 2022<br>$1,231M<br>36% of<br>portfolio<br>$<br>901<br>M<br>27% of<br>portfolio<br>$<br>412<br>M<br>12% of<br>portfolio<br>$336M<br>10% of<br>portfolio<br>42<br>%<br>15%<br>18<br>%<br>30<br>% |
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| Deposit Market Share Momentum<br>in the Twin Cities Continues<br>16<br>Total Deposits<br>–<br>Minneapolis/St. Paul MSA<br>1<br>2012<br>2022<br>Market Ripe for Continued Market Share Gains<br>•<br>Top<br>-<br>heavy deposit market<br>(top 2 market share = 62%)<br>•<br>Top 2 have lost market share each of the last eight years<br>(2014: 84% / 2022: 62%)<br>•<br>Very fragmented market after the top 2 with no other traditional<br>bank having market share over 5%<br>•<br>BWB has a 10<br>-<br>year CAGR of 23%, compared to the MSA of 4%<br>•<br>Significant M&A activity in the market creating opportunities for<br>talent and client acquisition<br>•<br>BWB has a local banking advantage with only 4 of the top 10<br>banks headquartered in MN<br>1<br>Source: S&P Capital IQ (data as of June 30<br>th<br>of each year)<br>Rank<br>Bank<br>HQ<br>Branches<br>Deposits<br>($M)<br>Market<br>Share<br>1<br>Wells Fargo & Co.<br>CA<br>100<br>79,407<br>$<br><br>49.80%<br>2<br>U.S. Bancorp<br>MN<br>100<br>43,088<br>$<br><br>27.02%<br>3<br>Ameriprise Financial Inc.<br>MN<br>1<br>5,107<br>$<br><br>3.20%<br>4<br>TCF Financial Corp.<br>MN<br>102<br>4,992<br>$<br><br>3.13%<br>5<br>Bank of Montreal<br>CAN<br>34<br>2,760<br>$<br><br>1.73%<br>6<br>Bremer Financial Corp.<br>MN<br>30<br>2,205<br>$<br><br>1.38%<br>7<br>Associated Banc-Corp<br>WI<br>28<br>1,395<br>$<br><br>0.87%<br>8<br>Klein Financial Inc.<br>MN<br>18<br>1,129<br>$<br><br>0.71%<br>9<br>Anchor Bancorp Inc.<br>MN<br>15<br>1,126<br>$<br><br>0.71%<br>10<br>Central Bancshares Inc.<br>MN<br>16<br>732<br>$<br><br>0.46%<br>17<br>Bridgewater Bancshares, Inc.<br>MN<br>2<br>398<br>$<br><br>0.25%<br>Top 10<br>141,941<br>$<br><br>89.01%<br>MSA Total<br>159,467<br>$<br><br>Rank<br>Bank<br>HQ<br>Branches<br>Deposits<br>($M)<br>Market<br>Share<br>1<br>U.S. Bancorp<br>MN<br>84<br>87,543<br>$<br><br>37.67%<br>2<br>Wells Fargo & Co.<br>CA<br>91<br>57,229<br>$<br><br>24.63%<br>3<br>Ameriprise Financial Inc.<br>MN<br>2<br>15,521<br>$<br><br>6.68%<br>4<br>Bank of Montreal<br>CAN<br>26<br>8,275<br>$<br><br>3.56%<br>5<br>Huntington Bancshares Inc.<br>OH<br>78<br>6,523<br>$<br><br>2.81%<br>6<br>Bremer Financial Corp.<br>MN<br>20<br>5,353<br>$<br><br>2.30%<br>7<br>Bank of America Corp.<br>NC<br>15<br>5,206<br>$<br><br>2.24%<br>8<br>Old National Bancorp<br>IN<br>29<br>3,864<br>$<br><br>1.66%<br>9<br>Bridgewater Bancshares, Inc.<br>MN<br>7<br>3,244<br>$<br><br>1.40%<br>10<br>State Bancshares, Inc.<br>ND<br>7<br>3,143<br>$<br><br>1.35%<br>Top 10<br>195,903<br>$<br><br>84.31%<br>MSA Total<br>232,366<br>$ |
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| Deposit Growth With Improved Mix<br>Provides Funding for Loan Growth<br>17<br>22%<br>23%<br>22%<br>24%<br>25%<br>27%<br>30%<br>29%<br>17%<br>13%<br>13%<br>11%<br>14%<br>15%<br>18%<br>15%<br>20%<br>23%<br>28%<br>26%<br>28%<br>26%<br>29%<br>33%<br>25%<br>27%<br>22%<br>20%<br>20%<br>14%<br>10%<br>9%<br>16%<br>14%<br>15%<br>19%<br>13%<br>18%<br>13%<br>14%<br>$762<br>$1,024<br>$1,339<br>$1,561<br>$1,823<br>$2,502<br>$2,946<br>$3,305<br>2015<br>2016<br>2017<br>2018<br>2019<br>2020<br>2021<br>3Q22<br>Interest<br>-<br>Bearing Transaction<br>Noninterest<br>-<br>Bearing Transaction<br>Time<br>Savings and Money Market<br>Brokered<br>Year<br>-<br>over<br>-<br>Year Deposit Growth<br>14%<br>NIB Transaction<br>Dollars in millions<br>Deposit Generation Supporting Loan Growth<br>•<br>Recent deposit growth drivers include:<br>•<br>New client and banker acquisition<br>opportunities due to M&A disruption<br>•<br>Expansion of commercial client relationships<br>and treasury management team<br>•<br>Strong and growing brand in the Twin Cities<br>•<br>Deposit growth outlook:<br>•<br>Continued optimism on core deposit pipeline<br>•<br>Core deposit growth may not always be<br>linear due to larger deposit relationships<br>•<br>Supplement core deposits with wholesale<br>funding as needed<br>Time<br>IB Transaction<br>Brokered<br>Savings & MM<br>4%<br>36%<br>(5)%<br>11%<br>Executing on Deposit Strategies to Continue to Fund Strong Loan Growth<br>•<br>Capitalizing on market opportunities through client and banker<br>acquisitions, including expanding commercial client relationships<br>Transaction<br>•<br>Capitalizing on market opportunities, while also focusing on<br>retaining maturing CD balances through money market accounts<br>Savings and<br>Money Market<br>•<br>Optimizing time deposit balances to help balance overall cost<br>of funds and client retention<br>Time<br>•<br>Looking to efficiently supplement core deposit growth with<br>occasional brokered deposits to support loan growth as needed<br>Brokered |
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| Scaling Enterprise Risk Management<br>Across a Growing Organization<br>18<br>Manage and mitigate dynamic risks while enhancing shareholder value, being responsive to<br>clients, and delivering simple solutions in unconventional ways<br>BWB Risk Management<br>Philosophy<br>Enterprise Risk Management<br>Attributes in Place Today at BWB<br>•<br>Proactively<br>addressing emerging risks<br>across all<br>risk categories<br>•<br>Continuing to scale a risk framework<br>aligned with<br>asset growth and emerging economic headwinds<br>•<br>Leveraging technology<br>to enhance processes and<br>controls while driving responsiveness<br>•<br>Reinforcing operational and financial resilience<br>through all<br>three lines of defense<br>•<br>Making investments to<br>bolster vendor/third<br>-<br>party<br>risk management program<br>•<br>Proactively making<br>enhancements to ESG and DEI<br>programs<br>as well as committing to recruitment and<br>retention strategies<br>Making Investments to<br>Proactively Identify and Mitigate Emerging Risks<br>Credit<br>Concentration<br>Risk<br>Information and<br>Cybersecurity<br>Risk<br>Enterprise<br>Risk and<br>Compliance<br>Financial Risk<br>•<br>Strong credit underwriting and administration program<br>•<br>Active credit oversight, analytics and portfolio monitoring<br>•<br>Expertise and specialization in key portfolios, including multifamily<br>•<br>Investment in enhanced infrastructure and security protocols<br>•<br>Proactively leverage technology to meet the evolving digital needs of clients while<br>maintaining safety and security<br>•<br>Effective risk culture and awareness model with ongoing training initiatives<br>•<br>Focus on recruitment and retention of highly skilled risk professionals across the bank<br>•<br>Investments in technology to enable scalable and effective governance and oversight<br>•<br>Proactively monitoring internal and external trends to quantify changes in risk profile<br>•<br>Maintain compliance with evolving regulatory expectations<br>•<br>Monitoring and managing the balance sheet with an eye toward economic and<br>interest rate volatility<br>•<br>Actively monitoring and deploying liquidity and developing long<br>-<br>term strategies for<br>capital preservation<br>•<br>Continued investments in CECL prep, LIBOR transition and SOX implementation |
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| Credit Risk Management Supports<br>Strong Loan Growth Momentum<br>19<br>5<br>-<br>Year Peak Net Charge<br>-<br>off Ratio vs. Peers<br>5<br>-<br>Year Peak Nonperforming Assets<br>2<br>/ Assets<br>vs. Peers<br>0.02%<br>BWB<br>Peer Bank Median<br>1<br>0.16%<br>0.03%<br>BWB<br>Peer Bank Median<br>1<br>0.56%<br>1<br>Includes publicly<br>-<br>traded banks on major exchanges with total assets between $3 billion and $10 billion as of September 30, 2022<br>(Source: S&P Capital IQ)<br>2<br>Nonaccrual loans, loans 90 days past due and foreclosed assets<br>Consistent Asset Quality<br>Outperformance vs. Peers<br>Why is BWB comfortable with its robust pace of loan growth?<br>Consistent<br>Underwriting<br>Standards<br>Active Credit Oversight<br>and Monitoring<br>Experienced Lending<br>and Credit Teams<br>•<br>Growth continues to<br>primarily be in<br>-<br>market<br>with over 80% of real<br>estate loan balances in<br>the Twin Cities market<br>•<br>No new lending areas<br>or significant changes<br>in portfolio<br>composition<br>–<br>continued focus on<br>multifamily expertise<br>•<br>Growth is a function of<br>enhanced brand,<br>market disruption<br>(M&A), favorable<br>economics and<br>expanding lending staff<br>•<br>No individual lending<br>authorities<br>•<br>Full loan committee<br>approval required for<br>approximately 80% of<br>loan origination volume<br>in 2022 YTD<br>•<br>Enhanced credit<br>concentration<br>monitoring<br>•<br>30<br>-<br>89 days past due<br>loans of less than<br>0.05% for 19<br>consecutive quarters<br>•<br>Added 5 SVP lenders<br>since early 2020<br>averaging 15+ years of<br>experience<br>•<br>Continued build<br>-<br>out of<br>the credit team in 2022,<br>to support loan growth<br>and credit risk review<br>manager with<br>regulatory experience<br>•<br>Solid lender and credit<br>analyst expertise<br>across segments,<br>geographies and<br>relationships |
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| 1<br>Nonaccrual loans plus loans 90 days past due and still accruing and foreclosed assets<br>Dollars in thousands<br>Credit Risk Management and Oversight<br>Driving Superb Asset Quality<br>20<br>$581<br>$461<br>$775<br>$722<br>$663<br>0.03%<br>0.02%<br>0.03%<br>0.02%<br>0.02%<br>2018<br>2019<br>2020<br>2021<br>3Q22<br>Nonperforming Assets<br>1<br>Consistently low NPA levels<br>NPAs<br>% of Assets<br>$20,031<br>$22,526<br>$34,841<br>$40,020<br>$46,491<br>1.59%<br>1.43%<br>1.38%<br>1.20%<br>1.18%<br>1.50%<br>1.42%<br>1.38%<br>2018<br>2019<br>2020<br>2021<br>3Q22<br>Allowance for Loan Losses<br>CECL adoption on January 1, 2023;<br>not expecting a material Day 1 impact based on current conditions<br>ALLL<br>% of Gross Loans<br>$46<br>$205<br>$435<br>$(29)<br>$(271)<br>0.00%<br>0.01%<br>0.02%<br>0.00%<br>(0.01)%<br>2018<br>2019<br>2020<br>2021<br>3Q22 YTD<br>Net Charge<br>-<br>Offs<br>Cumulative NCOs of $386K since 2017<br>Net Charge<br>-<br>Offs<br>% of Average Loans<br>% of Gross Loans (ex. PPP)<br>$4,184<br>$2,695<br>$15,164<br>$22,641<br>$30,767<br>1.82%<br>1.01%<br>4.54%<br>5.45%<br>6.26%<br>2018<br>2019<br>2020<br>2021<br>3Q22<br>Classified Assets<br>Continue to actively work with borrowers and closely monitor credits<br>Classified Assets<br>% of Bank Tier 1 Capital + ALLL |
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| Consistent Spread<br>-<br>Based Revenue<br>Growth Model<br>21<br>Noninterest Income<br>Net Interest Income<br>1<br>Amounts calculated on a tax<br>-<br>equivalent basis using statutory federal tax rate of 21%<br>2<br>Excludes loan fees and PPP loan balances, interest and fees; represents a Non<br>-<br>GAAP financial measure, see Appendix for<br>Non<br>-<br>GAAP reconciliation<br>3<br>Annualized<br>Dollars in thousands<br>Net Interest<br>Income<br>Noninterest<br>Income<br>20%<br>YoY Avg. Earning<br>Asset Growth<br>3.53%<br>3.38%<br>3Q22 Core Net<br>Interest Margin<br>2<br>3Q22 Net<br>Interest Margin<br>1<br>•<br>Net interest income growth driven by robust loan growth<br>and relatively stable net interest margin<br>•<br>Managing the balance sheet to optimize net interest<br>income with flat to modest near<br>-<br>term NII growth<br>expected<br>•<br>Expect near<br>-<br>term NIM compression as funding costs rise:<br>•<br>Higher interest rates passed on to deposit clients<br>in 3Q22 (full quarter impact in 4Q22)<br>•<br>Addition of wholesale deposits and borrowings to<br>supplement core funding<br>•<br>Expect mid<br>-<br>teens loan growth and higher asset yields to<br>continue to support net interest income despite near<br>-<br>term funding pressure<br>3<br>•<br>Comfortable with spread<br>-<br>based revenue stream given<br>commercial<br>-<br>focused business model<br>•<br>Less exposure to volatile revenue streams such as<br>mortgage<br>•<br>No material exposure to overdraft revenue<br>•<br>Ongoing review and evaluation of new potential streams<br>of noninterest income<br>•<br>Addition of a large new fee income stream more likely to<br>come from M&A than built in<br>-<br>house<br>$32,695<br>$42,118<br>$54,173<br>$64,738<br>$74,132<br>$87,964<br>$109,509<br>$129,428<br>$1,872<br>$2,567<br>$2,536<br>$2,543<br>$3,826<br>$5,839<br>$5,309<br>$6,142<br>$34,567<br>$44,685<br>$56,709<br>$67,281<br>$77,958<br>$93,803<br>$114,818<br>$135,570<br>2015<br>2016<br>2017<br>2018<br>2019<br>2020<br>2021<br>3Q22<br>YTD |
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| 46.5%<br>47.4%<br>49.0%<br>42.0%<br>40.7%<br>41.7%<br>43.3%<br>40.5%<br>41.0%<br>40.4%<br>59.3%<br>58.8%<br>57.0%<br>55.8%<br>56.2%<br>2018<br>2019<br>2020<br>2021<br>3Q22<br>YTD<br>Among the Most Efficient Banks<br>in the Industry<br>22<br>BWB Adjusted<br>1<br>BWB Reported<br>1<br>An Efficiency Ratio Consistently Well Below Peers<br>Peer Bank Median<br>2<br>1<br>Represents a Non<br>-<br>GAAP financial measure. See Appendix for Non<br>-<br>GAAP reconciliation.<br>2<br>Includes publicly<br>-<br>traded banks on major exchanges with total assets between $3 billion and $10 billion as of September 30, 2022<br>(Source: S&P Capital IQ)<br>3<br>3Q22 YTD annualized<br>What Makes BWB So Efficient?<br>Efficient Operating Culture With a<br>CRE<br>-<br>Focused Model<br>~2x<br>as many<br>assets per FTE<br>employee<br>compared to<br>the peer bank median<br>2<br>1.48%<br>NIE/average assets<br>3<br>(peer bank median<br>2<br>: 2.17%)<br>7<br>Branches<br>~5x<br>as many<br>assets per<br>branch<br>compared to the<br>peer bank median<br>2<br>Lower compensation and occupancy expenses as<br>a percent of average assets compared to peers<br>Branch<br>-<br>Light<br>Service Model<br>Branch<br>-<br>light model allows key investments in<br>technology while maintaining a low efficiency ratio<br>To maintain a low<br>efficiency ratio while<br>continuing to invest<br>in the business…<br>BWB CAGR Since 2017<br>Asset Growth<br>3<br>Revenue Growth<br>3<br>NIE Growth<br>3<br>23%<br>20%<br>18%<br>…we expect revenue and<br>expenses to continue<br>to grow as the balance<br>sheet grows over time |
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| Leveraging Technology to<br>Support Growth<br>23<br>Client<br>-<br>Facing Enhancements<br>•<br>Modern platforms and<br>payment options for business<br>and personal clients:<br>•<br>Digital banking<br>•<br>P2P<br>•<br>A2A<br>•<br>E signature<br>•<br>Real<br>-<br>time alerts<br>8%<br>YoY increase in<br>digital users<br>14%<br>YoY increase in<br>number of mobile<br>deposits<br>Scalable core to support near<br>-<br>term growth outlook<br>Core Banking Platform<br>IT Strategy:<br>improve client interactions, streamline processes,<br>automate activities, and embrace digital transformation<br>IT Decision<br>-<br>Making:<br>driven by unconventional culture, enhancing<br>the client experience and improving organizational efficiencies<br>IT Current State<br>Infrastructure Improvements<br>•<br>Collaborative technology<br>tools integrated into new<br>BWB Corporate Center<br>•<br>Remote capabilities to<br>support pandemic resiliency<br>•<br>Data center upgrades for<br>maintaining core<br>infrastructure<br>•<br>IT service management and<br>delivery enhancements<br>•<br>Cyber threat detection and<br>response<br>Workforce and Collaboration<br>•<br>Leveraging visualization and<br>analytics to support decision<br>-<br>making processes<br>•<br>Implementation of scalable<br>workflow automation to<br>improve efficiencies<br>•<br>PPP technology integration<br>–<br>highlighting the need for<br>automation<br>NEED:<br>PPP Case Study<br>An automated process to manage<br>workflows and track loan status<br>SOLUTION:<br>Partnership with ServiceNow to develop<br>a loan management platform<br>•<br>Integrated into existing workflows<br>•<br>Real<br>-<br>time status updates<br>•<br>Central tracking of client data<br>•<br>Less than one week from concept to<br>launch<br>-<br>ready<br>IMPACT:<br>•<br>Ongoing benefits include deposit<br>product integration and client follow<br>-<br>up efficiencies<br>•<br>Changing how BWB is evaluating<br>future technology solutions<br>48%<br>Reduction in<br>workload per case file<br>3<br>Hours saved per day<br>due to automation |
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| Investments in Technology Continue<br>24<br>What’s Next?<br>Core Banking<br>Enhancements<br>•<br>Expand cloud technology adoption to<br>accelerate time to value for the<br>business<br>•<br>Leverage partnerships to monitor<br>emerging technology trends<br>Cloud Adoption<br>and Fintech<br>Technology Spend Becoming a Larger Portion of Total Expenses<br>58%<br>59%<br>49%<br>48%<br>28%<br>21%<br>20%<br>19%<br>13%<br>11%<br>12%<br>10%<br>2%<br>10%<br>19%<br>24%<br>$1,643<br>$2,401<br>$3,385<br>$3,807<br>2019<br>2020<br>2021<br>3Q22<br>YTD Ann.<br>1<br>Includes data processing and information technology and telecommunications expense<br>2<br>Excludes and FHLB advance prepayment fees and debt prepayment fees<br>3<br>Annualized<br>Dollars in thousands<br>Technology expense mix shift toward increased efficiencies<br>through investments in workflow automation<br>Infrastructure<br>Core Banking<br>Workflow Automation<br>Security<br>4.4%<br>6.3<br>%<br>7.1<br>%<br>6.9%<br>•<br>Accelerate digital adoption and enrich<br>the client experience<br>•<br>Enhance end<br>-<br>user functionality<br>•<br>Modernize fraud and anomaly detection<br>Technology expense<br>1<br>as a % of total NIE<br>2<br>3<br>Enhanced Commercial<br>Loan Origination<br>Platform<br>•<br>Launched<br>an industry<br>-<br>leading Commercial<br>loan origination system in March 2022<br>•<br>Focuses on the core strength in<br>Commercial lending and client<br>responsiveness<br>•<br>Digitizes the end<br>-<br>to<br>-<br>end lending process<br>•<br>Creates broad organizational efficiencies<br>to support overall growth |
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| Proactive Capital Management<br>25<br>14.55%<br>12.98%<br>14.58%<br>15.55%<br>13.78%<br>12.07%<br>11.39%<br>10.35%<br>9.36%<br>8.47%<br>11.23%<br>10.69%<br>9.28%<br>10.82%<br>9.98%<br>11.03%<br>10.65%<br>8.96%<br>8.91%<br>7.57%<br>2018<br>2019<br>2020<br>2021<br>3Q22<br>Total Risk<br>-<br>Based Capital<br>Common Equity Tier 1 Capital<br>Capital Ratios Supported by Profitability and Capital Markets Activity<br>Tangible Common Equity to Tangible Assets<br>1<br>1<br>Represents a Non<br>-<br>GAAP financial measure. See Appendix for Non<br>-<br>GAAP reconciliation.<br>BWB Capital Priorities<br>1<br>2<br>3<br>Organic Growth<br>Share Repurchases<br>M&A<br>4<br>Dividends<br>Ample room for growth and profitability via strong organic loan<br>growth pipelines<br>Proactively return capital to shareholders by buying back stock<br>based on valuation, capital levels and other uses of capital<br>Review and evaluate corporate development opportunities that<br>complement BWB’s business model<br>Have not historically paid a common stock dividend given robust<br>loan growth opportunities<br>Tier 1 Leverage Ratio<br>•<br>Repurchased 99,310 shares of common stock ($1.6M) at a weighted average<br>price of $16.27<br>•<br>Board of Directors approved a new $25M stock repurchase program which<br>will expire on August 16, 2024 (no shares were repurchased under the new<br>program in 3Q22)<br>•<br>On October 15, 2022, BWB redeemed the remaining $13.75M of Fixed<br>-<br>to<br>-<br>Floating Rate Subordinated Notes issued in 2017 (funded by draw on<br>outstanding revolving line of credit)<br>3Q22 Capital Actions |
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| Funding Source<br>Available<br>Balance<br>Cash<br>36<br>$<br><br>Unpledged Securities<br>542<br><br><br>FHLB Advances<br>427<br><br><br>FRB Discount Window<br>156<br><br><br>Unsecured Lines of Credit<br>208<br><br><br>Secured Line of Credit<br>40<br><br><br> Total<br>1,409<br>$<br><br>Diverse Liquidity Position<br>26<br>14.3%<br>14.2%<br>18.4%<br>16.4%<br>14.0%<br>16.5%<br>18.9%<br>19.8%<br>26.2%<br>20.1%<br>$608<br>$750<br>$1,121<br>$1,480<br>$1,409<br>2018<br>2019<br>2020<br>2021<br>3Q22<br>Diverse Liquidity Position<br>Off<br>-<br>Balance Sheet Liquidity as a % of Assets<br>On<br>-<br>Balance Sheet Liquidity as a % of Assets<br>106.7%<br>104.9%<br>93.0%<br>95.7%<br>102.3%<br>2018<br>2019<br>2020<br>2021<br>3Q22<br>Comfortable operating with a<br>loan<br>-<br>to<br>-<br>deposit ratio between<br>95% and 105%<br>Comfortable Operating With a Loan<br>-<br>to<br>-<br>Deposit Ratio Between 95% and 105%<br>1.44%<br>1.41%<br>5.49%<br>4.13%<br>1.83%<br>2.86%<br>3.31%<br>6.73%<br>8.79%<br>3.24%<br>2018<br>2019<br>2020<br>2021<br>3Q22<br>Deploying Excess Liquidity<br>BWB has a demonstrated ability to<br>optimize liquidity levels by putting<br>excess liquidity to work<br>BWB<br>Peer Bank Median<br>1<br>Cash and Cash Equivalents / Assets Ratio<br>1<br>Includes publicly<br>-<br>traded banks on major exchanges with total assets between $3 billion and $10 billion as of September 30, 2022<br>(Source: S&P Capital IQ)<br>Dollars in millions |
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| 2022 Strategic Priorities<br>–<br>Building on Our Momentum<br>27<br>Continue Balance Sheet<br>Growth Trajectory<br>1<br>2<br>3<br>4<br>Invest in Business<br>Scalability to Support<br>Growth<br>Maintain Highly Efficient<br>Operating Model<br>Recruit, Develop and<br>Retain Top Industry Talent<br>•<br>Generate mid<br>-<br>to high<br>-<br>teens loan growth in 2022<br>•<br>Twin Cities organic growth opportunities expected to support growth<br>to $5 billion in assets in the Twin Cities over the next few years<br>•<br>Continue evaluating potential M&A opportunities<br>•<br>Make proactive investments<br>before<br>we need them<br>•<br>Includes areas such as technology and automation, risk<br>management and project management<br>•<br>Leverage strong spread<br>-<br>based revenue generation to drive<br>continued revenue growth<br>•<br>Evaluate potential opportunities to enhance revenue diversification<br>•<br>Manage expense growth in<br>-<br>line with asset growth<br>•<br>Attract top talent in key growth areas such as lending, credit,<br>treasury management, risk<br>and technology<br>•<br>Develop existing talent through management development<br>programs to enhance skills and promote growth within the company<br>•<br>Meet the evolving needs of our team members<br>–<br>modern amenities<br>in our new corporate center, collaboration, flexibility, ESG focus<br>YTD Progress<br>Annualized loan growth of 26.6%<br>Launched new commercial loan<br>origination system in March 2022<br>Adjusted efficiency ratio of 40.4%<br>Increased FTE employees by 12% |
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| Corporate Strategy Driving Above<br>-<br>Peer<br>Returns and Value Creation<br>28<br>Truly Unconventional Culture<br>Highly Efficient Business Model<br>Robust Balance Sheet Growth<br>Proactive Risk Management<br>Our Culture Driven Organic Growth Story<br>Return on Average Assets<br>1.51%<br>1.49%<br>1.24%<br>1.45%<br>1.42%<br>1.19%<br>1.22%<br>1.01%<br>1.32%<br>1.17%<br>2018<br>2019<br>2020<br>2021<br>3Q22<br>YTD<br>BWB Adjusted<br>1<br>Peer Bank Median<br>2<br>PPNR Return on Average Assets<br>1<br>2.20%<br>2.07%<br>2.09%<br>2.10%<br>2.15%<br>1.69%<br>1.67%<br>1.73%<br>1.65%<br>1.61%<br>2018<br>2019<br>2020<br>2021<br>3Q22<br>YTD<br>BWB<br>Peer Bank Median<br>2<br>Return on Average Tangible Common Equity<br>1<br>14.15%<br>13.72%<br>12.75%<br>15.60%<br>15.63%<br>13.39%<br>13.25%<br>10.79%<br>15.35%<br>14.92%<br>2018<br>2019<br>2020<br>2021<br>3Q22<br>YTD<br>BWB Adjusted<br>1<br>Peer Bank Median<br>2<br>Tangible Book Value Per Share<br>1<br>$7.22<br>$8.33<br>$9.31<br>$10.98<br>$11.33<br>2018<br>2019<br>2020<br>2021<br>3Q22<br>BWB<br>1<br>Represents a Non<br>-<br>GAAP financial measure. See Appendix for Non<br>-<br>GAAP reconciliation.<br>2<br>Includes publicly<br>-<br>traded banks on major exchanges with total assets between $3 billion and<br>$10 billion as of September 30, 2022 (Source: S&P Capital IQ) |
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| 3Q22 Earnings Highlights<br>30<br>•<br>Gross loan balances up $154.2 million, or 19.0% annualized, from 2Q22<br>•<br>Investment securities balances up $59.4 million, or 48.9% annualized, from 2Q22<br>•<br>Deposit balances up $103.1 million, or 12.8% annualized, from 2Q22<br>•<br>Record pre<br>-<br>provision net revenue (PPNR) of $21.4 million, up 4.9% from 2Q22<br>•<br>Core net interest margin<br>1<br>of 3.38%, up 4 bps from 2Q22<br>•<br>Well<br>-<br>controlled noninterest expense of $14.2 million, up 2.9% from 2Q22<br>•<br>Adjusted efficiency ratio<br>1<br>of 39.4%, down from 40.0% in 2Q22<br>•<br>Annualized net charge<br>-<br>offs (recoveries) to average loans of (0.03)%<br>•<br>Nonperforming assets to total assets of 0.02%, in<br>-<br>line with 2Q22<br>•<br>Growth<br>-<br>driven provision of $1.5 million; allowance to total loans at 1.38%<br>•<br>CECL adoption coming on January 1, 2023; not expecting a material Day 1 impact<br>•<br>Tangible book value per share<br>1<br>of $11.33, up $0.30 from 2Q22, despite market value depreciation of the securities portfolio<br>due to rising interest rates, which negatively impacted AOCI<br>•<br>Tangible common equity ratio<br>1<br>of 7.57%, down 30 bps from 2Q22<br>•<br>Repurchased 99,310 shares of common stock ($1.6 million) at a weighted average price of $16.27<br>Robust Balance<br>Sheet Growth<br>Highly Efficient<br>Operating Performance<br>Superb<br>Asset Quality<br>Tangible Book<br>Value Growth<br>$0.47<br>Diluted<br>EPS<br>Adjusted<br>Efficiency Ratio<br>1<br>Return on Avg. Tangible<br>Common Equity<br>1<br>Return on<br>Average Assets<br>PPNR Return on<br>Average Assets<br>1<br>1.46%<br>2.15%<br>17.03%<br>39.4%<br>1<br>Represents a Non<br>-<br>GAAP financial measure. See Appendix for Non<br>-<br>GAAP reconciliation |
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| Reconciliation of Non<br>-<br>GAAP Financial<br>Measures<br>–<br>Efficiency, TCE, TBV, NIM<br>31<br>*<br>Efficiency Ratio is adjusted to exclude the historic tax credit amortization and debt prepayment fees.<br>Dollars in thousands<br>Core Net Interest Margin<br>September 30, 2022<br>Net Interest Income (Tax-Equivalent Basis)<br>34,417<br>$<br><br>Less: Loan Fees<br>(1,400)<br><br><br>Less: PPP Interest and Fees<br>(96)<br><br><br> Core Net Interest Margin<br>32,921<br>$<br><br>Average Interest Earning Assets<br>3,871,896<br>$<br><br>Less: Average PPP Loans<br>(2,424)<br><br><br> Core Average Interest Earning Assets<br>3,869,472<br>$<br><br>Core Net Interest Margin<br>3.38%<br>As of and for the quarter ended,<br>December 31,<br>December 31,<br>December 31,<br>December 31,<br>December 31,<br>December 31,<br>December 31,<br>December 31,<br>YTD<br>YTD<br>Efficiency Ratio<br>2018<br>2018*<br>2019<br>2019*<br>2020<br>2020*<br>2021<br>2021*<br>3Q22<br>3Q22*<br>3Q22<br>3Q22*<br>Noninterest Expense<br>31,562<br>$<br><br>31,562<br>$<br><br>36,932<br>$<br><br>36,932<br>$<br><br>45,387<br>$<br><br>45,387<br>$<br><br>48,095<br>$<br><br>48,095<br>$<br><br>14,157<br>$<br><br>14,157<br>$<br><br>41,417<br>$<br><br>41,417<br>$<br><br>Less: Amortization of Tax Credit Investments<br>-<br><br><br>(3,293)<br><br><br>-<br><br><br>(3,225)<br><br><br>-<br><br><br>(738)<br><br><br>-<br><br><br>(562)<br><br><br>-<br><br><br>(114)<br><br><br>-<br><br><br>(294)<br><br><br>Less: Debt Prepayment Fees<br>-<br><br><br>-<br><br><br>-<br><br><br>-<br><br><br>-<br><br><br>(7,043)<br><br><br>-<br><br><br>(582)<br><br><br>-<br><br><br>-<br><br><br>(52)<br><br><br>(52)<br><br><br>Less: Amortization Intangible Assets<br>(191)<br><br><br>(191)<br><br><br>(191)<br><br><br>(191)<br><br><br>(191)<br><br><br>(191)<br><br><br>(191)<br><br><br>(191)<br><br><br>(48)<br><br><br>(48)<br><br><br>(143)<br><br><br>(143)<br><br><br>Adjusted Noninterest Expense<br>31,371<br>$<br><br>28,078<br>$<br><br>36,741<br>$<br><br>33,516<br>$<br><br>45,196<br>$<br><br>37,415<br>$<br><br>47,904<br>$<br><br>46,760<br>$<br><br>14,109<br>$<br><br>13,995<br>$<br><br>41,222<br>$<br><br>40,928<br>$<br><br>Net Interest Income<br>64,738<br>$<br><br>64,738<br>$<br><br>74,132<br>$<br><br>74,132<br>$<br><br>87,964<br>$<br><br>87,964<br>$<br><br>109,509<br>$<br><br>109,509<br>$<br><br>34,095<br>$<br><br>34,095<br>$<br><br>96,805<br>$<br><br>96,805<br>$<br><br>Noninterest Income<br>2,543<br><br><br>2,543<br><br><br>3,826<br><br><br>3,826<br><br><br>5,839<br><br><br>5,839<br><br><br>5,309<br><br><br>5,309<br><br><br>1,387<br><br><br>1,387<br><br><br>4,594<br><br><br>4,594<br><br><br>Less: (Gain) Loss on Sales of Securities<br>125<br><br><br>125<br><br><br>(516)<br><br><br>(516)<br><br><br>(1,503)<br><br><br>(1,503)<br><br><br>(750)<br><br><br>(750)<br><br><br>-<br><br><br>-<br><br><br>-<br><br><br>-<br><br><br>Adjusted Operating Revenue<br>67,406<br>$<br><br>67,406<br>$<br><br>77,442<br>$<br><br>77,442<br>$<br><br>92,300<br>$<br><br>92,300<br>$<br><br>114,068<br>$<br><br>114,068<br>$<br><br>35,482<br>$<br><br>35,482<br>$<br><br>101,399<br>$<br><br>101,399<br>$<br><br>Efficiency Ratio<br>46.5%<br>41.7%<br>47.4%<br>43.3%<br>49.0%<br>40.5%<br>42.0%<br>41.0%<br>39.8%<br>39.4%<br>40.7%<br>40.4%<br>Tangible Common Equity &<br>Tangible Common Equity/<br>Tangible Assets<br>December 31,<br>2018<br>December 31,<br>2019<br>December 31,<br>2020<br>December 31,<br>2021<br>3Q22<br>Total Shareholders' Equity<br>220,998<br>$<br><br>244,794<br>$<br><br>265,405<br>$<br><br>379,272<br>$<br><br>382,007<br>$<br><br>Less: Preferred Stock<br>-<br><br><br>-<br><br><br>-<br><br><br>(66,514)<br><br><br>(66,514)<br><br><br>Total Common Shareholders' Equity<br>220,998<br><br><br>244,794<br><br><br>265,405<br><br><br>312,758<br><br><br>315,493<br><br><br>Less: Intangible Assets<br>(3,678)<br><br><br>(3,487)<br><br><br>(3,296)<br><br><br>(3,105)<br><br><br>(2,962)<br><br><br>Tangible Common Equity<br>217,320<br>$<br><br>241,307<br>$<br><br>262,109<br>$<br><br>309,653<br>$<br><br>312,531<br>$<br><br>Total Assets<br>1,973,741<br>$<br><br>2,268,830<br>$<br><br>2,927,345<br>$<br><br>3,477,659<br>$<br><br>4,128,987<br>$<br><br>Less: Intangible Assets<br>(3,678)<br><br><br>(3,487)<br><br><br>(3,296)<br><br><br>(3,105)<br><br><br>(2,962)<br><br><br>Tangible Assets<br>1,970,063<br>$<br><br>2,265,343<br>$<br><br>2,924,049<br>$<br><br>3,474,554<br>$<br><br>4,126,025<br>$<br><br>Tangible Common Equity/Tangible Assets<br>11.03%<br>10.65%<br>8.96%<br>8.91%<br>7.57%<br>Tangible Book Value Per Share<br>December 31,<br>2018<br>December 31,<br>2019<br>December 31,<br>2020<br>December 31,<br>2021<br>3Q22<br>Book Value Per Common Share<br>7.34<br>$<br><br>8.45<br>$<br><br>9.43<br>$<br><br>11.09<br>$<br><br>11.44<br>$<br><br>Less: Effects of Intangible Assets<br>(0.12)<br><br><br>(0.12)<br><br><br>(0.12)<br><br><br>(0.11)<br><br><br>(0.11)<br><br><br>Tangible Book Value Per Common Share<br>7.22<br>$<br><br>8.33<br>$<br><br>9.31<br>$<br><br>10.98<br>$<br><br>11.33<br>$<br><br>Total Common Shares<br>30,097,274<br><br><br>28,973,572<br><br><br>28,143,493<br><br><br>28,206,566<br><br><br>27,587,978<br><br><br>As of and for the year ended,<br>As of and for the year ended,<br>As of and for the year ended, |
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| Reconciliation of Non<br>-<br>GAAP Financial<br>Measures<br>–<br>PPNR<br>32<br>Dollars in thousands<br>Pre-Provision Net Revenue<br>December 31,<br>2018<br>December 31,<br>2019<br>December 31,<br>2020<br>December 31,<br>2021<br>3Q22<br>3Q22<br>YTD<br>Noninterest Income<br>2,543<br>$<br><br>3,826<br>$<br><br>5,839<br>$<br><br>5,309<br>$<br><br>1,387<br>$<br><br>4,594<br>$<br><br>Less: Gain on sales of Securities<br>125<br><br><br>(516)<br><br><br>(1,503)<br><br><br>(750)<br><br><br>-<br><br><br>(52)<br><br><br>Total Operating Noninterest Income<br>2,668<br><br><br>3,310<br><br><br>4,336<br><br><br>4,559<br><br><br>1,387<br><br><br>4,542<br><br><br>Plus: Net Interest Income<br>64,738<br><br><br>74,132<br><br><br>87,964<br><br><br>109,509<br><br><br>34,095<br><br><br>96,805<br><br><br> Net Operating Revenue<br>67,406<br>$<br><br>77,442<br>$<br><br>92,300<br>$<br><br>114,068<br>$<br><br>35,482<br>$<br><br>101,347<br>$<br><br>Noninterest Expense<br>31,562<br>$<br><br>36,932<br>$<br><br>45,387<br>$<br><br>48,095<br>$<br><br>14,157<br>$<br><br>41,417<br>$<br><br>Less: Amortization of Tax Credit Investments<br>(3,293)<br><br><br>(3,225)<br><br><br>(738)<br><br><br>(562)<br><br><br>(114)<br><br><br>(294)<br><br><br>Less: FHLB Advances Prepayment Fees<br>-<br><br><br>-<br><br><br>(7,043)<br><br><br>-<br><br><br>-<br><br><br>-<br><br><br>Less: Debt Prepayment Fees<br>-<br><br><br>-<br><br><br>-<br><br><br>(582)<br><br><br>-<br><br><br>-<br><br><br> Total Operating Noninterest Expense<br>28,269<br>$<br><br>33,707<br>$<br><br>37,606<br>$<br><br>46,951<br>$<br><br>14,043<br>$<br><br>41,123<br>$<br><br>Pre-Provision Net Revenue<br>39,137<br>$<br><br>43,735<br>$<br><br>54,694<br>$<br><br>67,117<br>$<br><br>21,439<br>$<br><br>60,224<br>$<br><br> Plus:<br>Non-Operating Revenue Adjustments<br>(125)<br><br><br>516<br><br><br>1,503<br><br><br>750<br><br><br>-<br><br><br>52<br><br><br> Less:<br>Provision for Loan Losses<br>3,575<br><br><br>2,700<br><br><br>12,750<br><br><br>5,150<br><br><br>1,500<br><br><br>6,200<br><br><br>Non-Operating Expense Adjustments<br>3,293<br><br><br>3,225<br><br><br>7,781<br><br><br>1,144<br><br><br>114<br><br><br>294<br><br><br>Provision for Income Taxes<br>5,224<br><br><br>6,923<br><br><br>8,472<br><br><br>15,886<br><br><br>5,312<br><br><br>14,125<br><br><br>Net Income<br>26,920<br>$<br><br>31,403<br>$<br><br>27,194<br>$<br><br>45,687<br>$<br><br>14,513<br>$<br><br>39,657<br>$<br><br>Average Assets<br>1,777,592<br>$<br><br>2,114,211<br>$<br><br>2,617,579<br>$<br><br>3,189,800<br>$<br><br>3,948,201<br>$<br><br>3,736,783<br>$<br><br>Pre-Provision Net Revenue Return on Average Assets<br>2.20%<br>2.07%<br>2.09%<br>2.10%<br>2.15%<br>2.15%<br>As of and for the year ended, |
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| Reconciliation of Non<br>-<br>GAAP Financial<br>Measures<br>–<br>Diluted EPS, ROA, ROATCE<br>33<br>Dollars in thousands<br>2018<br>2019<br>2020<br>2021<br>3Q22<br>3Q22<br>YTD<br>Net Income<br>26,920<br>$<br><br>31,403<br>$<br><br>27,194<br>$<br><br>45,687<br>$<br><br>14,513<br>$<br><br>39,657<br>$<br><br>Less: Preferred Stock Dividends<br>-<br><br><br>-<br><br><br>-<br><br><br>(1,171)<br><br><br>(1,013)<br><br><br>(3,040)<br><br><br>Net Income Available to Common Shareholders<br>26,920<br>$<br><br>31,403<br>$<br><br>27,194<br>$<br><br>44,516<br>$<br><br>13,500<br>$<br><br>36,617<br>$<br><br>Add: Debt Prepayment Fees<br>-<br><br><br>-<br><br><br>7,043<br><br><br>582<br><br><br>Less: Tax Impact<br>-<br><br><br>-<br><br><br>(1,676)<br><br><br>(151)<br><br><br>Net Income, Excluding Impact of Debt Prepayment Fees<br>26,920<br><br><br>31,403<br><br><br>32,561<br><br><br>46,118<br><br><br>Net Income Available to Common Shareholders,<br> Excluding Impact of Debt Prepayment Fees<br>26,920<br>$<br><br>31,403<br>$<br><br>32,561<br>$<br><br>44,947<br>$<br><br>Diluted Weighted Average Shares Outstanding<br>29,436,214<br>$<br><br>29,996,776<br>$<br><br>29,170,220<br>$<br><br>28,968,286<br>$<br><br>Adjusted Diluted Earnings Per Common Share<br>0.91<br>$<br><br>1.05<br>$<br><br>1.12<br>$<br><br>1.55<br>$<br><br>Average Assets<br>1,777,592<br>$<br><br>2,114,211<br>$<br><br>2,617,579<br>$<br><br>3,189,800<br>$<br><br>Adjusted Annualized ROA<br>1.51%<br>1.49%<br>1.24%<br>1.45%<br>Average Total Shareholders' Equity<br>194,083<br>$<br><br>232,539<br>$<br><br>258,736<br>$<br><br>316,237<br>$<br><br>384,020<br>$<br><br>382,834<br>$<br><br>Less: Average Preferred Stock<br>-<br><br><br>-<br><br><br>-<br><br><br>(24,915)<br><br><br>(66,514)<br><br><br>(66,514)<br><br><br>Average Total Common Shareholders' Equity<br>194,083<br>$<br><br>232,539<br>$<br><br>258,736<br>$<br><br>291,322<br>$<br><br>317,506<br>$<br><br>316,320<br>$<br><br>Less: Effects of Average Intangible Assets<br>(3,772)<br><br><br>(3,582)<br><br><br>(3,395)<br><br><br>(3,204)<br><br><br>(2,989)<br><br><br>(3,036)<br><br><br>Average Tangible Common Equity<br>190,311<br>$<br><br>228,957<br>$<br><br>255,341<br>$<br><br>288,118<br>$<br><br>314,517<br>$<br><br>313,284<br>$<br><br>Annualized Return on Average Tangible Common Equity<br>14.15%<br>13.72%<br>10.65%<br>15.45%<br>17.03%<br>15.63%<br>Adjusted Annualized Return on Average Tangible Common Equity<br>14.15%<br>13.72%<br>12.75%<br>15.60%<br>Diluted EPS, ROA & ROATCE<br>As of and for the year ended, |
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